Editing Option style (section)

==Less common exercise rights==
There are other, more unusual exercise styles in which the payoff value remains the same as a standard option (as in the classic American and European options above) but where early exercise occurs differently:

===Bermudan option===
*A '''Bermudan option''' is an option where the buyer has the right to exercise at a set (always discretely spaced) number of times. This is intermediate between a European option&mdash;which allows exercise at a single time, namely expiry&mdash;and an American option, which allows exercise at any time (the name is jocular: [[Bermuda]], a [[British overseas territory]], is somewhat American and somewhat European—in terms of both option style and physical location—but is nearer to American in terms of both). For example, a typical Bermudian [[swaption]] might confer the opportunity to enter into an [[interest rate swap]]. The option holder might decide to enter into the swap at the first exercise date (and so enter into, say, a ten-year swap) or defer and have the opportunity to enter in six months time (and so enter a nine-year and six-month swap); see [[Swaption#Valuation|Swaption: Valuation]]. Most exotic interest rate options are of Bermudan style.

===Canary option===
* A '''Canary option''' is an option whose exercise style lies somewhere between European options and Bermudian options. (The name refers to the relative geography of the [[Canary Islands]].) Typically, the holder can exercise the option at quarterly dates, but not before a set time period (typically one year) has elapsed. The ability to exercise the option ends prior to the maturity date of the product. The term was coined by Keith Kline, who at the time was an agency fixed income trader at the Bank of New York.

===Capped-style option===
* A '''capped-style option''' is not an [[interest rate cap]] but a conventional option with a pre-defined profit cap written into the contract. A capped-style option is ''automatically exercised'' when the underlying security closes at a price making the option's [[mark to market]] match the specified amount.

===Compound option===
* A '''compound option''' is an option on another option, and as such presents the holder with two separate exercise dates and decisions. If the first exercise date arrives and the 'inner' option's market price is below the agreed strike the first option will be exercised (European style), giving the holder a further option at final maturity.

===Shout option===
* A '''shout option''' allows the holder effectively two exercise dates: during the life of the option they can (at any time) "shout" to the seller that they are locking-in the current price, and if this gives them a better deal than the payoff at maturity they'll use the underlying price on the shout date rather than the price at maturity to calculate their final payoff.

===Double option===
* A '''double option''' gives the purchaser a composite call-and-put option (an option to either buy or sell) in a single contract. This has only ever been available in commodities markets and has never been traded on exchange.

===Swing option===
* A '''swing option''' gives the purchaser the right to exercise one and only one call or put on any one of a number of specified exercise dates (this latter aspect is Bermudan). Penalties are imposed on the buyer if the net volume purchased exceeds or falls below specified upper and lower limits. Allows the buyer to "swing" the price of the underlying asset. Primarily used in energy trading.

===Evergreen option===
* An '''evergreen option''' is an option where the buyer has the right to exercise by providing a pre-determined period of notice.  This option could be either American or European in nature or alternatively it could be combined with option styles that have non-vanilla exercise rights.  For example, an 'Evergreen-Bermudan' option provides the buyer of the option with the right to exercise at set specific points in time after providing the other counterparty with a pre-determined period of notice of their intent to exercise the option.  Evergreen options provide sellers with a period of time to prepare for settlement once the buyer has exercised their rights under the option.  Embedding evergreen optionality within on and off-balance sheet products can enable counterparties (such as banks that must adhere to Basel III) to lengthen their inflow or outflow obligations.<ref>{{Citation
|last=Gooley
|first=Nathan John
|title=Evergreen, bank funding & liquidity management
|publisher=University of Newcastle
|year=2015
|pages=204-205
|hdl=1959.13/1310643
}}</ref>